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Lie of the Day From Biden: My Budget Will Pay for Itself

Treasury Secretary Janet Yellen Says Biden's Budget is Sustainable Partly Because the US is Borrowing at Negative Rates.
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Don't worry, we are borrowing at negative rates

Debt-to-GDP Will Top 100%

US Debt-to-GDP level is poised to top 100% but Treasury Secretary Janet Yellen says Biden's Budget is Responsible.

U.S. Treasury Secretary Janet Yellen said on Thursday that President Joe Biden’s fiscal 2022 budget request will increase the U.S. federal debt-to-GDP ratio above its current level of about 100% over the next decade.

But Yellen told a U.S. House of Representatives Appropriations subcommittee that Biden’s budget plans were fiscally responsible, partly because the real interest burden to finance the federal debt is currently negative because long-term Treasury yields of 1.6% are below a 2% inflation rate.

“We’ll have a temporary period of spending too and some of these increases, will - beyond the budget window - will result in lower deficits and more tax revenue to support those expenditures. I believe it is a fiscally responsible program,” Yellen said.

Government Budget Projections Fiscal 2021

Government Budget Projections Fiscal 2021

Allegedly, this is sustainable because long-term yields are below the rate of inflation, conveniently held there by the Fed.

Office of Management (OMB) assumptions are in a 138 page Budget of the United States Government, Fiscal Year 2021.

The above table is courtesy of The Balance.

No Recession for Another 9 Years?

Notice the convenience of no recession forecast for another 9 years.

However, the Small Business Chronicle says the Average Business Cycle is about 5.5 years. Forbes says a Business Cycle Averages 4.7 Years

Budget deficits tend to soar in recessions. 

Lie of the Day Never Changes

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The budget lie of the day never changes. No matter which party is in power, the same claim is made.   

No, It Won't Pay For Itself

Yellen's and Biden's assumptions are the same as every politicians', this debt will pay for itself.

In practice, it never does and Biden's budget won't pay for itself either.

Escalating budget madness never stops. Each recession is worse than the one that preceded it. 

But the same assumption always prevails: There will never be another recession.

The MMT crowd brushes deficits aside as as "saving" missing the obvious savings truism. 

Money Wasted ≠ Saving

Please consider Really, What are Savings?

Note that Malinvestment ≠ Investment and Money Wasted ≠ Saving.

Those are two ways of saying the same thing. I added discussion of those things today to the above link. Please give the post another look.

A Friend Asks "Is the Fed Trying to Destroy the US Dollar?"

Finally, please consider A Friend Asks "Is the Fed Trying to Destroy the US Dollar?"

I give a 10 point synopsis of what's going on.